Magazine ad forecast still shows sunny skies

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Despite the decline of the dotcoms, despite softness in the leading advertising category and despite new uncertainty about tobacco advertising, magazine publishers hit summer expecting a sunny second half for advertising.

"In the biggest of big pictures, it depends on how well the American economy continues to hum along," said Kent Brownridge, general manager of Wenner Media. "By and large it still seems to be humming."

Mr. Brownridge's optimism is echoed by those within the magazine industry and among media buyers, even among those less sanguine about the economy.

"The business is strong even with the economy taking a dip," said Christine Miller, VP-chief marketing officer at the Magazine Publishers of America.

"I don't see a softening for any media in the second half of the year," agreed Gene DeWitt, CEO, Optimedia.

The MPA's original forecast for 2000 pegged ad revenues up 8% or 9%; now Ms. Miller expects them to jump 12% to 13%.

"I expect all our titles, with one or two exceptions, will have record years in terms of profit, and, for most of them, record years in terms of ad revenue as well," said Don Logan, president-CEO of Time Inc. But records won't be set in every category.

"If you look at domestic auto and [general] retail, they're all trying to do business in a new and different way," Mr. Logan added, referring to those categories advertising in media other than magazines. "We'll continue to see uneven results coming from there."

Automotive remains magazines' largest category, accounting for $512 million in revenues through April, a 5.2% decline from '99, according to Publishers Information Bureau figures.


Executives at Newsweek, who saw ad pages drop off 11% through April, attributed much of this year's rockier results to automotive. They cited Ford Motor Co.'s commitments to Internet and outdoor advertising at the expense of magazines, while expressing optimism the auto giant would return.

"This year appears to be a repeat of last year's pattern," said Newsweek Publisher Carolyn Wall, "which is a surge of business in the second half of the year." She declined to be more specific than to say that the second half should chart slightly above last year's pace, while the first half was "slightly off."

To lift sales, auto companies are also turning to TV ads, hyping incentive deals this summer.

Elsewhere, executives are more expansive. "Regardless of all the talk about fragmenting media dollars, it's really a golden age for magazines," said Michael Clinton, senior VP-chief marketing officer at Hearst Magazines. "We expect to see continued strong growth in fashion and beauty.

"Luxury advertising is particularly strong, because of the great economy, and unless the economy goes south, we expect to see the continued growth there," he added. Hearst's ad pages rose 18% through June; Marie Claire (up 20%), Redbook (up 20%), Esquire (up 15%) and Cosmopolitan (up 11%) led the way, according to Hearst counts.

Paradoxically, the best illustration of magazines' strength comes where one expects weakness, among the wreckage of failed dot-coms.

Last year's Christmas present to publishers was the fourth-quarter flurry of unexpected dot-com ad dollars, as Net businesses lunged to brand themselves. But no publishers expect a repeat performance this year.

However, overall ad growth in technology remains robust, and few publishers admit anything other than slight concern over late-year comparisons.

"We expected a lot [of dot-com ad dollars] to disappear," said Time Inc.'s Mr. Logan.

But given continued efforts by surviving dot-coms and "blended efforts" by traditional retailers hawking online efforts, as well as continued technology growth, Time Inc.'s tech sector will "be pretty much even or up," he said.

Industrywide, technology ad revenues are up 22% through April, according to PIB. "Everyone asks if the dot-com boom will continue," said the MPA's Ms. Miller. "My answer is 'Yes. It just may be wearing different clothes.' "


The real story is in home and business technology's next wave. "The Internet infrastructure is growing up. [Internet service providers], the broadband wires, the get-your-home-ready for streaming video [companies] will be spending heavily," Ms. Miller said.

Through April, telecommunications PIB revenues rose 30%, and communications networking systems were up 134%.

Tech titles even claim an upside from the dot-com fallout. "It made everyone realize the market's here," said Drew Schutte, publisher of Conde Nast Publications' Wired.

"No matter what happened to dot-coms, the more stable consumer advertisers realize there's a real well-targeted marketplace for them here."

The upshot for Wired, Mr. Schutte said, is he expects this year's ad pages to rise 30% to 40%.

Copyright June 2000, Crain Communications Inc.

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